Indecisive trade across Asian markets in what was another quiet session.

NZ trade balance better than expected, however NZD fails to benefit.

Looking ahead, highlights include, UK GDP, US existing home sales and jobless claims.

ASIA

Asia equity markets traded with an indecisive tone following the downbeat finish on Wall St. where sentiment was dampened by Trump’s tspaneats to shut down the government and terminate NAFTA. ASX 200 (+0.2%) was mildly positive amid strength in material names and with the largest movers in the index driven by recent earnings, while Nikkei 225 (-0.3%) declined as exporters suffered from USD/JPY’s brief slip to below 109.00. Elsewhere, Shanghai Comp. (Unch.) and Hang Seng (+0.1%) were choppy as the PBoC refrained from operations which resulted to a CNY 100bln daily net liquidity drain, while participants also digested a slew of earnings. Finally, 10yr JGBs saw mild support from the cautious tone in Japanese stocks and as yields declined in which the 20yr yield fell to its lowest since December.

PBoC refrained from open market operations today. (Newswires)

PBoC set CNY mid-point at 6.6525 (Prev. 6.6633)

EUROPE/UK

ECB's Hansson noted that he opposes any change to QE issue or issuer limits and highlighted that the EUR's appreciation thus far is "not a big change." He also suggested that the ECB’s easing bias doesn't have to focus on bond target and that asset-purchase composition can matter more than size. (Newswires)

FX

FX markets lacked firm direction amid a light calendar and with participants looking ahead to the looming Jackson Hole symposium. Nonetheless, USD attempted to nurse some of the losses seen in the wake of President Trump’s worrisome comments, but the rebound was minimal with the PBoC also strengthening its mid-point in reaction to the subdued greenback. Elsewhere, JPY pared some of its gains from the risk averse tone seen in the prior session, which helped JPY-crosses off their worst levels and saw USD/JPY regain the 109.00 handle, while NZD was choppy having failed to sustain the support from better than expected trade figures.

New Zealand Trade Balance (Jul) 85M vs. Exp. -200M (Prev. 242.0M. Rev. 246.0mln). (Newswires)

New Zealand Exports (Jul) 4.63B vs. Exp. 4.42B (Prev. 4.70B)

New Zealand Imports (Jul) 4.55B vs. Exp. 4.60B (Prev. 4.46B, Rev. 4.45B)

COMMODITIES

Commodities were relatively uneventful overnight with the energy complex holding onto yesterday’s gains. Elsewhere, gold (-0.2%) slightly pulled back as the greenback came off worst levels and with focus now on the looming Jackson Hole symposium, while copper continues to eye a test of the USD 3/lb level to the upside.

US

US Treasuries caught a bid, with some modest steepening apparent as government shutdown worry put a bottom on US 2-year yields, while FOMC voter Kaplan offered little new on the monetary policy front in a moderated Q&A session. US Sep’17 10y T-note futures settled at 126.29+, up 11+ ticks.

Fed's Kaplan (Voter) reiterated that the tight US labour market calls for removal of some accommodation and that balance sheet run off should begin soon. He stressed that he hasn't committed to raising interest rates again this year. He also believes that global oil markets in fragile equilibrium, sees a good chance of global undersupply in 5-7 years